2017 employee benefit trends report - goempyrean€¦ · solution and strategy. at-a-glance guide 2...

At-A-Glance Guide from Empyrean Benefit Solutions July 2017

2017 Employee Benefit Trends Report from Empyrean

Given the impact of mobile devices and constant

connectivity on consumer experiences, it should

come as no surprise that employee benefits are also

becoming increasingly consumer-driven.

Demands for intelligent decision support, anytime

access, and intuitive technology are greatly influencing

benefits delivery and management, as expectations

evolve towards simplifying one of the most complex

and critical elements of an employee’s well-being.

While HR and benefit teams are challenged to stretch

their limited time and budgets farther, they must also stay

on top of a multitude of administrative tasks, cost and

decision analysis, employee questions, and regulatory

compliance requirements. At the same time, competition

over top talent is driving the need to pair more robust

benefit offerings with smarter enrollment and engagement

experiences.

Naturally, these factors are prompting shifts in the way

HR leaders approach their benefit strategies. Client data

analyzed from this year’s Annual Enrollment survey not

only indicates a growing interest in consumer-driven plans,

but also demonstrates the importance of maintaining

strategic control in order for HR to remain adaptive to

rapid business changes.

2017 Employee Benefit Trends Report from Empyrean

This At-A-Glance analyzes data gathered from Empyrean clients, identifying and exploring the top 2017 Annual Enrollment trends to help navigate, inform, and improve your own benefits strategy and execution.

• Strategic flexibility and adaptability are key

• Employers remain interested in marketplace options

• HDHP adoption is on the rise

• HSAs are critical to HDHP success

• Surcharges have grown in popularity

• Wellness incentive use has steadied

• Dependent verification is becoming increasingly outsourced

At-A-Glance Guide from Empyrean Benefit Solutions

1At-A-Glance Guide from Empyrean Benefit Solutions

To respond to your company’s shifting benefit

needs, it is crucial that you maintain strategic

agility. In fact, 83% of clients surveyed have

changed their benefits strategy within the last three

years. This figure illustrates the serious need for

employers to ensure they have the freedom to alter

their strategy and keep ahead of potential curves

and remain successful in their goals.

One of the most important elements in retaining

strategic control is your benefits administration

technology platform – the very system responsible

for carrying out your strategy.

Not every vendor’s technology allows for the

same level of flexibility. While a provider may be

capable of delivering a solution to meet your initial

requirements upon implementation, they may not

be able to tailor that same solution to fit different

needs down the road. If your technology vendor is

incapable of adjusting to your business’s changing

demands, you may find yourself stuck with a failing

solution and strategy.


Strategic flexibility and adaptability are key

2017 EMPLOYEE BENEFIT TRENDS REPORT

83% of employers surveyed have changed their benefits strategy within the last three years.

This figure illustrates the serious need for employers to ensure they have the freedom to alter their strategy and keep ahead of potential curves and remain successful in their goals.

Mergers, acquisitions, and shifts within your industry

or internal organization can all render your current

strategy ineffective, making fast changes necessary.

However, every provider’s technology is different,

and some solutions may force compromises that limit

your adaptability.

Legacy systems are often incapable of responding

and adapting to change, because they are built

on convoluted and decades-old programming.

These systems require extensive efforts and costs

to maintain and alter their technology to fit clients’

specific needs. Other systems, while they may

feature a sleek, surface-level user experience, may

run on creaky architecture that breaks as a client’s

data and security demands scale up in complexity

and depth.

How has your benefits strategy changed in the past three years?

Three years is the typical length of a benefits

administration technology agreement. Without

ensuring you’ve chosen a flexible partner from the

start, you may find yourself locked into a contract



Strategic flexibility and adaptability are key, Cont’d.

Employers’ Coverage Waiting Periods *

38% Coverage effective date of hire

31% First of the month following date of hire

18% After 30/31 days of employment

16% After 60 days of employment

* Clients were allowed to select multiple responses if applicable to their strategy, enabling total percentages to exceed 100%.

with a vendor that is incapable of meeting your

needs – an unfortunate realization that becomes

clear after service begins. By selecting a partner that

utilizes strategy-agnostic technology, you can ensure

your solution remains adaptable and avoid painting

yourself into a corner.

A strategy-agnostic platform will provide you with the

flexibility to change and improve your benefits offering

over time, with fewer technology modification costs.

Empyrean clients can ably adjust and improve their

strategy, because the technology is architected to

conform and evolve as their needs shift over time.

Your benefits administration partner should also

remain carrier-agnostic, capable of administering any

plan from any carrier you choose to offer. Finding a

responsive provider that can remain tailored to your

strategy and benefits throughout your service – not just

at implementation – will help ensure a successful long-

term partnership.



A strategy-agnostic platform is architected to conform and evolve as your needs shift over time.

A carrier-agnostic platform is capable of administering any plan from any carrier you choose to offer.

Strategic flexibility and adaptability are key, Cont’d.

Among Empyrean clients, benefit marketplaces

remain an attractive option for HR leaders looking to

balance cost and coverage. While Accenture research

has shown private exchange adoption to be slower

than initially expected, 1 interest in marketplace options

continues to accelerate.

In fact, 50% of clients surveyed are considering moving

to a marketplace or private exchange option. With a

marketplace or exchange, employers can offer more

coverage choices to participants, and can also help

make spending more predictable when combined with

a defined-contribution model.

Employers may wish to take advantage of a

marketplace in addition to offering a more traditional

benefits package. Given conventional technology

limitations, some employers have struggled with

moving all of their eligible participants from a defined-

benefit model to a defined-contribution model – or

have been forced to use disparate and uncoordinated

systems to offer the two models separately.



Employers remain interested in marketplace options

50% of clients surveyed are considering moving to a marketplace or private exchange option.

Hybrid Strategy

A hybrid strategy allows employers to utilize both a traditional defined-benefit and defined-contribution offering simultaneously and on the same fully-integrated system. This new strategic and technological approach eliminates the headaches of previously arduous and limited dual-model solutions.

* We invite you to explore Empyrean’s At-A-Glance Guide: Traditional Benefit Offering, Private Exchange, or Hybrid Strategy: Which is Right for Your Workforce? for an in-depth

look at the benefits of a hybrid strategy.

When paired with a modern benefits administration

technology platform, this combined—or hybrid—

approach provides employees with the convenient online

shopping experience and range of decision support tools

they need to become more informed, educated, and

confident benefit consumers. With a hybrid approach,

employers can deliver both a traditional defined-benefit

and defined-contribution offering simultaneously and

on the same fully-integrated system. This new strategic

and technological approach eliminates the

headaches of previously arduous and limited

dual-model solutions.

For example, an employer could utilize a hybrid strategy

to offer benefits to active employees following a

traditional defined-benefit model. At the same time,

benefits may be offered to retirees through an exchange,

following a defined-contribution model. This way,

companies can provide the competitive benefits

active employees are seeking, while also gaining

better predictions and managing costs through

retiree benefit programs.



When paired with a modern benefits administration technology platform, this combined—or hybrid—approach provides employees with the convenient online shopping experience and range of decision support tools they need to become more informed, educated, and confident benefit consumers.

Employers remain interested in marketplace options, Cont’d.

As benefits consumerism becomes increasingly

prevalent, high deductible health plans (HDHPs) are

also becoming popular as employers seek to control

skyrocketing coverage costs.

Though these consumer-driven plans are becoming

more common among employers, HR teams may find

it difficult to communicate the advantages of these

options to their workforces. Employees—especially

those accustomed to more traditional plans such as

Preferred Provider Organizations (PPOs) and Health

Maintenance Organizations (HMOs)—may not fully

comprehend the benefits offered by HDHPs, and

may instead disregard these plans as corner-cutting

by their employer.

This perception can be challenging to overcome, as

many employees already struggle to understand their

benefits to begin with.



HDHP adoption is on the rise

* HDHP adoption has increased from 72% reported in 2016.

80% of clients surveyed now offer an HDHP.*

22% utilize a full-replacement strategy, offering HDHPs as their only medical coverage option.

Though consumer-driven plans are becoming more common among employers, HR teams may find it difficult to communicate the advantages of these options to their workforces.

Easy-to-follow educational videos, anytime access to plan documents, and a simple yet powerful recommendation engine can all help employees determine if an HDHP is right for them and their families.

When asked, more than half of employees admit

they do not completely understand their polices.2

If offering an HDHP, it’s vital that workers have the

resources they need to comprehend the benefits of

electing this type of plan. Easy-to-follow educational

videos, anytime access to plan documents, and a

simple yet powerful recommendation engine can all

help employees determine if an HDHP is right for

them and their families.

While the concept of a high deductible may seem

discouraging to employees at first glance, the right

approach can help you cut through assumptions

and reach your HDHP election goals. For example,

some employees do not realize that PPO plans

may also have high deductibles, and in some cases

these amounts can reach or exceed the minimum

deductible for an HDHP.*3

Your benefits administration platform is the primary

tool that empowers workers to learn about, compare,

and ultimately choose from among your coverage

options. Your technology partner should help drive

HDHP adoption by facilitating an intuitive and

engaging benefits experience.



Your benefits administration platform is the primary tool that empowers workers to learn about, compare, and ultimately choose from among your coverage options.

Your technology partner should help drive HDHP adoption by facilitating an intuitive and engaging benefits experience—one that is specifically aligned with your strategic goals.

HDHP adoption is on the rise, Cont’d.

* The 2017 minimum deductible for an HDHP is $1,300 for individual coverage and $2,600 for family coverage. Minimum deductible amounts are set by the Internal Revenue Service (IRS).

Your provider should also assist you with your

communication needs as they relate to your overall

benefits strategy, enabling the delivery of relevant,

targeted messages through your employee benefits

portal, emails, and text messages. Messages should

be capable of being tailored to various employee

populations to maximize impact and effectiveness.

These communications can prove to be

especially helpful tools when introducing an

HDHP. Messages can help spread awareness and

educate, as well as inform and highlight employees

that may benefit the most from the plan. You

should be able to tailor messages to reach specific

populations within your workforce – for example,

targeting younger, likely healthy workers with

information about how electing an HDHP may help

them save on premium costs.

According to a recent MetLife study, 71% of

employers were able to improve their benefits

communications when working with an enrollment

firm.4 Your benefits administration partner should

do the same, enabling you to effectively deliver

messages to your workforce, improve results, and

further support your benefits program.



HDHP adoption is on the rise, Cont’d.

71% of employers were able to improve their benefits communications when working with an enrollment firm.4

To maximize employee satisfaction, benefit leaders

must also convey the valuable tax breaks workers can

leverage by pairing a Health Savings Account (HSA)

with their high deductible plan.

An HSA can help workers wholly leverage their

HDHP’s lower premiums, by enabling them to

schedule automatic deductions from their paychecks.

By automatically transferring the premium savings

seen when an HDHP is elected over a more expensive

plan, your employees accrue pre-tax savings they

can then use for eligible medical expenses. Plus, HSA

funds, unlike those of a Flexible Spending Account

(FSA) or Health Reimbursement Account (HRA),

never expire – so employees can still use their HSA

savings if they later enroll in non-HDHP coverage,

and can even use their funds well into retirement.

In addition to encouraging and enabling the use of

an HSA, an employer’s HSA contribution (if offered)

is an often-significant factor that can make the cost

commitment of an HDHP much more manageable

for participants.



HSAs are critical to HDHP success

73% of employers surveyed offer their employees access to an HSA.

To maximize employee satisfaction, benefit leaders must also convey the valuable tax breaks workers can leverage by pairing a Health Savings Account (HSA) with their high-deductible plan.

Companies must also consider the timing of their

contribution, which can have a large effect on

employee appreciation. More than half of the

employers surveyed chose to offer a lump-sum

contribution to their workers’ HSAs.

Employers must weigh the benefits of a lump-sum

HSA contribution against potential losses from

employees that leave their organization throughout

the year. A single contribution is likely to have a

greater impact on employee satisfaction, as well as

ensure that members of your workforce have funds

to cover a portion of the upfront costs they are

responsible for under their HDHP—which can also

help alleviate financial stress.

Providing employees with total compensation

statements that include the value of your HSA

contribution, made accessible anytime through

their benefits administration portal, is another

simple way to help workers recognize the full value

of your offering.

To support your HDHP option, your benefits

administration partner should also work to inform

and simplify your HSA experience.



HSAs are critical to HDHP success, Cont’d.

* Clients were allowed to select multiple responses if applicable to their strategy, enabling total percentages to exceed 100%.

$1,317 for family coverage

27% per pay period

10% quarterly

Average Employer HSA Contribution

$699 for employee-only coverage

Employers’ HSA Contribution Schedule*

57% one-time

10% semi-annual

In addition to encouraging and enabling the use of an HSA, an employer’s HSA contribution (if offered) is an often significant factor that can make the cost commitment of an HDHP much more manageable for participants.

Employees should have access to educational

and engaging resources that provide them with

a thorough understanding of types of eligible

expenses, how their HSA works, and how to use

their account to help manage their high deductibles

and save for emergencies. When providing plan

comparisons and recommendations, your platform’s

recommendation engine should also bring visibility

to available HDHP and HSA pairings that fit the

needs of eligible participants.

Your benefits administration solution should also

encourage employees to easily set up paycheck

deductions during enrollment, by allowing them to

specify their desired annual deduction amount right

alongside their plan elections. Workers can then

use one convenient portal to manage their HSA

contributions as well as their benefits. Keeping HSA

options within the enrollment process creates a more

seamless experience and promotes further account

utilization and benefits engagement.



To support your HDHP option, your benefits administration partner should also work to inform and simplify your HSA experience.

Employees should have access to educational and engaging resources that provide them with a thorough understanding of how their HSA works, and enable them to easily set up and manage paycheck deductions during enrollment and year-round.

HSAs are critical to HDHP success, Cont’d.

Surcharges have become popular tools for employers

looking to curb excess benefits spending, whether

applying an additional charge to curb the costs of spousal

coverage or to encourage workers to quit smoking or using

tobacco products.

With a spousal surcharge, additional costs are incurred

when an employee elects medical coverage for a spouse

that already has access to a plan through their own

employer.

Though spousal surcharges may lower employers’

overall costs, some companies are still holding back

from implementing them. Employers that add a fee for

spousal coverage may risk negatively impacting employee

satisfaction levels, and may experience increased difficulty

when tracking the individual surcharge eligibility of an

employee’s spouse throughout the year.

Companies are also looking to lower costs and increase

overall employee health through the use of tobacco

surcharges, which raises the costs of medical coverage

and other benefits for tobacco users.

Employers likely run a lower risk of employee dissatisfaction

when utilizing a tobacco surcharge, as this option also falls

in line with overall tobacco cessation trends.5



Surcharges growing in popularity

* Spousal surcharge utilization increased from 24% in 2016.

32% of employers now utilize a spousal surcharge.*

32% of employers add a tobacco surcharge to eligible employees’ medical coverage costs.

20% of employers add a tobacco surcharge to the cost of their life insurance coverage.

$563 Average Spousal Surcharge

$225 Average Tobacco Surcharge for Medical Coverage

$255 Average Tobacco Surcharge for Life Insurance

Wellness incentives have remained relatively flat in

the past year.

And though there has been a recent explosion of

wellness options made available on the market, HR

leaders may be slow to adopt these programs. They

are likely waiting to gain a better grasp of the ROI

they can expect before fully committing to a program

of their own.



Wellness incentive use has steadied

50% of clients surveyed offer a wellness incentive to their employees.

More than ever, companies are now making dependent

verification a mandatory part of their enrollment

processes. This year’s survey has also illustrated a

marked increase in the number of clients that are

leveraging outsourced dependent verification services.

Your benefits administration technology partner should

help simplify your dependent verification process, to

ease your burden, and provide a more streamlined

verification experience for your employees.



Dependent verification is becoming increasingly outsourced

* Dependent verification increased from 67% in 2016.◊ Dependent verification outsourcing from 44% in 2016.

70% of employers surveyed now require dependent verification. *

57% of clients now outsource this function to Empyrean.◊

Companies are looking to drive efficiency,

increase engagement, and realize strategic

agility; using smart, modern, and consumer-friendly

technology is the key. Your employees are becoming

progressively aware of their position as benefit

consumers rather than passive participants, and with this

realization comes expectations for more robust benefit

tools and decision support6 – especially as people

use online resources for their primary researching and

shopping experiences.

Enrolling in and administering benefits continues to

get more complex. Having the support of a trusted

partner is critical to executing a successful strategy

and program, and it’s not enough to simply have a

benefits administration technology solution in place.

Your solution must be capable of adapting to and

delivering exactly what you and your employees need

– with no compromises.

Your business, benefits, and strategy are constantly

on the move. Your success depends on keeping up

with daily requests and changes. Is your benefits

administration technology responsive and agile

enough to help you manage these responsibilities?



Your employees are becoming progressively aware of their position as benefit consumers rather than passive participants, and with this realization comes expectations for more robust benefit tools and decision support.6

Conclusion

Does your technology provider dedicate the right time

and resources to efficiently administer your solution, and

ensure you receive support from experts that are well-

versed in your specific solution, strategy, and goals?

This year’s trends indicate the growing need for

employers to remain flexible and ready for inevitable

(and sometimes unexpected) changes. By working

with a proven partner equipped with a carrier- and

strategy-agnostic platform, powerful decision support

and communication tools, and a client-focused

organizational structure, you can rest easy knowing that

your benefits program will be continuously supported,

no matter what comes next.

.



This year’s trends indicate the growing need for employers to remain flexible and ready for inevitable (and sometimes) unexpected changes.

By working with a proven partner, you can rest easy knowing that your benefits program will be continuously supported, no matter what comes next.

Conclusion, Cont’d.

1. “Private Health Insurance Exchange Enrollment Increases 35 Percent to 8 Million in 2016; Continues to Force Industry-Wide Evolution.” Accenture Consulting, Chicago, IL. January 2016. https://www.accenture.com/t20160728T063108__w__/us-en/_acnmedia/PDF-3/Accenture-Private-Health-Insurance-Exchange-Enrollment-Increases.pdf

2. 2015 Aflac Open Enrollment Survey Infographics. Aflac, Inc., Columbus, GA. February 2015. https://www.slideshare.net/AflacMedia/open-enrollment-survey-infographics

3. Simon, Javier. “Employer Health Insurance Deductibles Rise 50% for 2016.” Plansponsor, Stamford, CT. August 24, 2016.http://www.plansponsor.com/Employer-Health-Insurance-Deductibles-Rise-50-Percent-for-2016/

4. “14th Annual U.S. Employee Benefit Trends Study - Opportunity is Knocking: How Benefits Lay the Groundwork for a Thriving Workplace.” MetLife, New York, NY. January 2016. https://benefittrends.metlife.com/media/1200/14th-annual-ebts-insights-to-go_web-version_exp0517.pdf

5. “CDC Report Reveals Decline in American Smokers.” National Public Radio, Washington, D.C. May 24, 2016 http://www.npr.org/2016/05/24/479349619/cdc-report-reveals-decline-in-american-smokers

6. “2015 Aflac WorkForces Report: Executive Summary.” Aflac, Inc. Columbus, GA. February 2015. https://www.aflac.com/docs/awr/pdf/2015-overview/2015_executive_summary.pdf

Empyrean 2017 Annual Enrollment Survey: n=43

References



At-A-Glance Guide from Empyrean Benefit Solutions

Empyrean Benefit Solutions is one of the fastest-growing

providers of technology and services for managing

employee health and welfare benefits programs.

Empyrean provides enrollment, eligibility management,

ACA reporting, and other plan administration services

to employers, insurance brokers, and healthcare

exchanges. Unlike other providers, Empyrean combines

the industry’s most client-adaptive and configurable

benefits technology platform with expert, responsive

service to deliver Hi-Touch benefits administration.

Visit www.GoEmpyrean.com for more information.

About Empyrean



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